This article first appeared on GuruFocus .
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Revenue:$29 million, up 13% year over year and 7% sequentially.
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Licensing and Related Revenue:$18.2 million, up 21% year over year, representing 63% of total revenue and the strongest licensing quarter in three years.
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Royalty Revenue:$10.8 million, up 17% sequentially and roughly flat year over year, representing 37% of total revenue.
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Gross Margin:87% on a GAAP basis and 88% on a non-GAAP basis.
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GAAP Operating Loss:Improved to $2.1 million from $4.5 million in the prior year.
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Non-GAAP Operating Income:$3.1 million, up from $0.8 million in the prior year, with non-GAAP operating margins expanding to 11%.
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GAAP Net Loss:$2.9 million, or $0.10 per diluted share, compared with a loss of $3.7 million, or $0.15 per share, in the prior year.
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Non-GAAP Net Income:$2.3 million, up 28% year over year, with non-GAAP diluted EPS of $0.08.
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Devices Shipped:567 million CEVA-powered devices, up 16% year over year.
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Mobile Handset Modem Shipments:61 million units, up from 55 million units in the prior year.
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Consumer IoT Shipments:487 million units, up from 409 million units a year ago.
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Industrial IoT Shipments:19 million units, down from 24 million units, though industrial royalty revenues increased 7% year over year.
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Bluetooth Shipments:295 million units, down 16% year over year.
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Cellular IoT Shipments:68 million units, a quarterly record, up 3% year over year.
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Wi-Fi Shipments:80 million units, up 28% year over year.
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Cash and Investments:Approximately $221 million in cash, cash equivalents, marketable securities, and cash deposits.
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Cash Flow from Operations:$5.8 million generated during the quarter.
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Full-Year 2026 Revenue Outlook:Raised to an increase of 13% to 15% over 2025.
Release Date: August 10, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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CEVA Inc ( NASDAQ:CEVA ) delivered a strong second quarter with revenue increasing 13% year-over-year to $29 million, fueled by licensing revenue growing 21% to its highest level in three years.
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The company signed a strategically significant AI licensing agreement with a leading global AI and computing platform company for its NeuPro-M NPU IP, representing a new category of AI customers and enabling deeper collaboration.
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CEVA Inc ( NASDAQ:CEVA ) is seeing a positive trend of customers adopting broader platform solutions, which increases content per design, deepens integration, and expands the long-term royalty opportunity.
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Royalty revenue showed a sequential recovery, driven by strong wireless connectivity growth, ramping automotive AI programs, and market share gains in smartphones, with Wi-Fi shipments up 28% year-over-year.
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The company raised its full-year 2026 revenue outlook to 13%-15% growth and expects non-GAAP operating income to increase approximately 70% year-over-year, reflecting strong operating leverage.
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CEVA Inc ( NASDAQ:CEVA ) signed 10 licensing agreements in the quarter, including two with first-time customers and two directly with OEMs, demonstrating broad-based demand across the US, Europe, China, and Asia-Pacific.
Negative Points
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CEVA Inc ( NASDAQ:CEVA ) experienced a sequential decline in Wi-Fi shipments in the second quarter, following several quarters of expansion, due to customer mix and product ramp timing.
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Bluetooth shipments decreased 16% year-over-year to 295 million units, indicating weakness in that specific connectivity segment.
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Industrial IoT shipments declined to 19 million units from 24 million units a year ago, although royalty revenues increased due to a richer product mix.
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The company faces potential headwinds from memory pricing dynamics and broader supply constraints, which could impact the mobile handset industry and second-half performance.
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Net financial income was below guidance at $1 million, primarily due to foreign exchange effects related to Israeli shekel-denominated lease obligations.
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The full-year guidance assumes normal seasonality and market share gains, but the company acknowledges uncertainty around the impact of the memory shortage on the wireless handset industry.
Q & A Highlights
Q: Can you provide more context on how NeuPro is being used by the new custom silicon engagement with the leading global AI and computing platform company? Any details on the functionality of that chip and timeline to materiality? A: Amir Panush, CEO: This engagement involves a deep collaboration where the customer has access to our core NPU architecture. Together, we define special features and capabilities to run their specific neural networks with very high efficiency, focusing on metrics like tokens per watt and latency. The customer's ability to access the complete software stack, including the operating system, allows for further optimization. In terms of timing, this is a standard engagement that typically goes to tape-out within a few quarters, with production expected in about 1.5 to 2 years. We don't expect the custom nature of the deal to extend the timeline because our IP is deeply configurable, which was a key factor in winning this socket against the customer's internal development option.
Q: You mentioned improving share in entry-level smartphones as well as premium. Could you please speak a bit more about what you are seeing there and what's driving the share gains? A: Amir Panush, CEO & Yaniv Arieli, CFO: We saw a very meaningful recovery in royalties from Q1 to Q2, driven by our customer UNISOC gaining market share against its competition. Yaniv added that UNISOC is gradually moving more to 5G from being the volume leader in 4G, which means higher ASPs for CEVA. They have also won several new design wins with major brands like Vivo and Xiaomi, which previously used MediaTek more extensively. We expect this positive momentum to continue into the second half of the year, also supported by a large US OEM ramping its internal modem, which should provide additional market share gains for CEVA.
Q: You talked at length about engaging deeper with customers, perhaps with hardware-software integration. Is this going to result in more custom IP blocks or more standard products, and will it affect how we should think about royalty rates? A: Amir Panush, CEO: We are seeing more demand for custom solutions, which aligns with our investment strategy. The key point is that the royalty per unit we can extract from custom and complete platform offerings is meaningfully higher than for component IP. For example, the strategic AI deal we signed with a large OEM that has both hardware and software capabilities will drive significantly higher royalty per unit versus our typical NPU offering due to the level of integration and customization.
Q: You mentioned a large company bringing their wireless design in-house rather than buying from someone else. Is that a trend you're seeing longer term, and what does it mean for CEVA? A: Amir Panush, CEO & Yaniv Arieli, CFO: We see this as a positive trend where customers are looking for a complete offering, including radio IP, to integrate quickly into their portfolios. This brings three additional values: the licensing agreement and future royalties are meaningfully higher than for component IP alone; it creates stronger stickiness as customers rely more on CEVA capabilities; and it strengthens the make-versus-buy decision in our favor. Yaniv added that the constant upgrades in wireless connectivity standards create recurring licensing revenue and a strong stickiness mechanism.
Q: Now that AHRQ has been acquired by Global Founders, are you seeing any additional momentum in your licensing business, maybe the NPU licensing business with that transition? A: Amir Panush, CEO: Yes, we definitely see this as a tailwind for our business, especially for our NeuPro NPU product line. The competitive landscape will be more favorable for us because we focus on providing a complete platform, while the acquired entity will be handled differently. This helps us compete better in the US and Western world with our NPUs, and we believe it contributed to signing one of those very strategic deals this quarter.
Q: The full year guidance is now raised to 13% to 15%. Can you provide more details on the growth of licensing and royalty relative to the company average growth? A: Yaniv Arieli, CFO: We don't break down licensing and royalties on a full revenue basis, but we have achieved a step function in licensing revenue, adding AI which is now about 20% of our revenue. On the royalty front, the higher annual guidance is supported by normal seasonal shifts, with the second half typically being stronger. We also have new royalty payers like automotive that started ramping this year, market share gains in smartphones, and higher ASPs from combo Bluetooth/Wi-Fi solutions. This puts us in a stronger position for 13% to 15% year-over-year growth with significant improvement in operating margins.
Q: Regarding the entry-level smartphone momentum, how are you thinking about the risks from component cost inflation, particularly memory pricing? A: Yaniv Arieli, CFO & Amir Panush, CEO: Low-end smartphones need much less memory than high-end devices, so we haven't seen significant issues in the last couple of quarters. While memory constraints still exist in the industry, our customer was able to address supply and demand sequentially from Q1 to Q2, with a tremendous increase in volume. We expect good seasonal expansion in the second half, though the memory shortage's exact impact is hard to quantify.
Q: When we talk to the US customer in the quarter adding a baseband subsystem in addition to the DSP, are we referring to RF in this case or is it something else? A: Amir Panush, CEO: This is related to a complete wireless access subsystem with a full modem baseband technology, hardware and software, but excluding the RF. It's a complete offering that we harden to the specific process and customer needs.
Q: Does a Bluetooth HDT class design win carry a materially higher royalty per unit than your current Bluetooth designs, and when does the HDT royalties start contributing? A: Amir Panush, CEO: Yes, HDT is a much-improved technology with higher throughput and new use cases, which helps drive higher royalty per unit versus legacy Bluetooth. We are also offering it as a complete solution with our RF IP, which increases the royalty per unit even further. Volume ramp will start towards the end of this year, with significant ramp through 2027 and 2028. The customer we announced is currently ramping the product in the marketplace.
Q: Wi-Fi units declined sequentially in the quarter following a few quarters of sequential expansion. Could you dive into the drivers of the volatility and how you're thinking about the trajectory going forward? <
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
